Egypt’s Electricity & Renewable Energy Ministry has issued a draft power purchase agreement (PPA), land usufruct agreement, allowing the licence-holder to use and profit from the land they rent, and government guarantees on PPAs to developers.

Developers are studying the terms for the project and have until 28 April to respond with feedback.

Many developers have now incorporated special purpose vehicles and committed capital to them. They are now ready to apply for land allocations.

Consultations with international financial institutions including the International Finance Corporation (IFC) and the European Bank for Reconstruction & Development (EBRD) took place in February.

“Some but not all of the feedback from key lenders is reflected in the draft documents,” says Marc Norman, at US law firm Chadbourne & Parke. “Developers will be looking for anything problematic from the perspective of financing and risk allocation.”

Developers are unhappy at the short time frame – roughly two weeks – given to evaluate the draft documents. However, a bankable PPA would increase confidence on the scheme and encourage developers to commit capital and take the next steps, such as paying connection fees.

Some doubts remain over bankability, but the responsiveness of government agencies such as the New & Renewable Energy Authority (NREA) is encouraging.

“The number one bankability issue at the moment is the availability of hard currency, as tariffs are paid in Egyptian pounds, with a proportion indexed to the dollar,” says Moritz Borgmann, partner at German consultancy Apricum. “There is no solution yet, and developers are negotiating the level of guarantees with the government.”

Three developers have signed land agreements for 50MW projects: Jordan’s Philadelphia Solar, Saudi Arabia’s FAS Energy and local Orascom.

Sites have been put aside on the Gulf of Suez for wind projects, at Benban and Kom Ombo for solar projects and along the Nile between Assiut and Beni Suef for both technologies.

The consultants are German Fichtner.

The ministry hopes to sign all the PPAs in the 4,300MW first round of feed-in tariff projects by the end of 2016. This comprises 2,000MW of wind projects, 2,000MW of solar photovoltaic (PV) projects and 300MW of rooftop solar PV projects. This implies the award of at least 80 large contracts and 600 rooftop contracts.

Egypt has excellent potential for wind and solar, but only had 687MW of solar and wind capacity installed in 2012. It has completed only one renewable energy project since then, phase one of Gabal el-Zeit Wind Farm, which has a capacity of 200MW. Phase two, with a capacity of 200MW, is being commissioned.

Several other NREA projects are still in the tendering process, including the 250MW Gulf of Suez Wind Farm and the 200MW Kom Ombo PV Plant.